Union: GM clo­sures could af­fect Gran­ite City Works

‘‘ WE’VE GOT A LOT OF CUS­TOMERS. WE’RE KIND OF DI­VER­SI­FIED IN A LOT OF DIF­FER­ENT MAR­KETS.

Dan Sim­mons, the pres­i­dent of United Steel Work­ers Lo­cal 1899

With Gen­eral Mo­tors plan­ning to close five plants in 2019, a lo­cal man­u­fac­turer might see some fi­nan­cial ef­fect in the long run.

Gran­ite City Works pro­duces al­loys for spe­cialty wheels for Gen­eral Mo­tors ve­hi­cles, said Dan Sim­mons, the pres­i­dent of the United Steel Work­ers Lo­cal 1899 in Gran­ite City.

GM an­nounced it plans to end pro­duc­tion at five plants, in­clud­ing one in Canada and two in Michi­gan, one in Ohio and one in Mary­land.

Sim­mons said GM’s clo­sures should not have an im­me­di­ate ef­fect on Gran­ite City be­cause the plant has plenty of busi­ness with other steel prod­ucts, in­clud­ing pipe and tube cus­tomers, and crane and ap­pli­ances busi­nesses. The mar­ket for those prod­ucts has picked up, Sim­mons said.

“We’ve got a lot of cus­tomers,” Sim­mons said. “We’re kind of di­ver­si­fied in a lot of dif­fer­ent mar­kets.”

But other U.S. Steel plants that make steel used for truck beds, hoods, un­der­car­riages, body

frames and side pan­els of ve­hi­cles, could be af­fected by the clo­sures, Sim­mons said.

U.S. Steel could de­cide to move pro­duc­tion lines around if Gran­ite City’s sis­ter plants start suf­fer­ing. That could have an ef­fect on Gran­ite City Works’ op­er­a­tions, Sim­mons said, but no one could pre­dict ex­actly what that im­pact could be.

ECO­NOMIC RIP­PLE EF­FECT

Any­time a ma­jor man­u­fac­turer shuts down, the clo­sure im­pacts sup­pli­ers down the line, says Tim Sul­li­van, in­struc­tor in the De­part­ment of Eco­nomics at South­ern Illi­nois Univer­sity Ed­wardsville. Sul­li­van is also direc­tor of the Of­fice of Re­gional Eco­nomic Anal­y­sis.

“Ev­ery fa­cil­ity like a GM plant is go­ing to be buy­ing things from sup­pli­ers, whether it’s parts, or they hire work­ers,” Sul­li­van said. “When they shut down, that means their sup­pli­ers then lose part of their sales, which means they lay off part of their work­force. That does rip­ple through the econ­omy.”

How much an ef­fect a clo­sure has on a sup­plier de­pends on how close the sup­plier and buyer are ge­o­graph­i­cally and eco­nom­i­cally, Sul­li­van said. Sup­pli­ers are much more spread out and di­verse in what they pro­duce than in the past, Sul­li­van said.

“They might be buy­ing parts from other side of the coun­try, or the other side of the world,” Sul­li­van said. “On one hand you have mul­ti­ple lay­ers of pro­tec­tion if the car plant shuts down. On the other hand it does mean it’s more spread out and less con­cen­trated that if a plant shuts down in Ot­tawa, it could af­fect not only a sup­plier but a sup­plier’s sup­plier.”

U.S. Steel plants up north near Detroit or Canada would be more heav­ily im­pacted than Gran­ite City Works, said Ja­son Fer­nan­dez, a trustee with the union.

DO TAR­IFFS AF­FECT CAR SALES?

Gran­ite City Works fired up its blast fur­naces again af­ter Pres­i­dent Don­ald Trump’s ad­min­is­tra­tion im­ple­mented a 25 per­cent tar­iff on for­eign steel.

Ear­lier in 2018, GM low­ered its profit fore­casts for the year cit­ing higher steel and alu­minum prices. The auto-man­u­fac­turer even warned of job losses and lower wages be­cause of tar­iffs, ac­cord­ing to Busi­ness In­sider.

The union pres­i­dent says he does not be­lieve de­clin­ing car sales are di­rectly con­nected to the tar­iffs.

“At the full 25 per­cent if ap­plied to a $35,000 ve­hi­cle, (the full ex­tent of the tar­iff) would only equate to a $200 cost in­crease,” Sim­mons said. “But if you’re mass pro­duc­ing that many ve­hi­cles, a cou­ple hun­dred dol­lars comes out to a $1 bil­lion loss as op­posed to be­fore, I guess those num­bers could sup­port that.”

“It’s not go­ing to stop me from buy­ing a $35,000 ve­hi­cle if that’s what I’m in the mar­ket for, and know­ing I’m get­ting Amer­i­can steel, made in the United States,” Sim­mons added.

A U. S. Steel worker watches as a slab of steel moves through the pro­duc­tion process. With Gen­eral Mo­tors plan­ning to close five plants in North Amer­ica, the move could af­fect Gran­ite City Steel in South­ern Illi­nois, which re­opened af­ter tar­iffs on for­eign steel were put in place by Pres­i­dent Trump.